Which inventory method is better described as having a balance-sheet focus and why is it considered as such?

A) FIFO; better approximates the value of ending inventory.

B) LIFO; better approximates the value of ending inventory.

C) LIFO; better approximates inventory cost necessary to generate revenue.

D) FIFO; better approximates inventory cost necessary to generate revenue.

Answer: FIFO; better approximates the value of ending inventory.

What is the ending inventory balance for Julia & Company assuming that it uses FIFO?

A) $125.

B) $100.

C) $110.

D) $85.

Answer: $85.

LIFO is considered an income-statement approach for reporting inventory because it:

A) Always results in a higher amount of net income being reported.

B) Better approximates the value of ending inventory.

C) Better approximates inventory cost necessary to generate revenue.

D) Always results in a lower amount of net income being reported.

Answer: Better approximates inventory cost necessary to generate revenue.

Marvin sold 2,300 units of inventory during the month. Cost of goods sold assuming weighted-average cost would be:

Marvin sold 2,300 units of inventory during the month. Cost of goods sold assuming weighted-average cost would be: (Round weighted-average unit cost to 4 decimals)

A) $16,733.

B) $17,408.

C) $16,713.

D) $16,089.

Answer: $16,713.

The company reports cost of goods sold of $16,000. Which inventory cost method is the company using?

A) FIFO.

B) LIFO.

C) Weighted-average.

D) The answer cannot be determined with the information given.

Answer: FIFO.

What is the cost of goods sold for Julia & Company assuming it uses LIFO?

A) $125.

B) $100.

C) $110.

D) $85.

Answer: $110.

Dunbar sold 700 units of inventory during the month. Cost of goods sold assuming weighted-average cost would be

Dunbar sold 700 units of inventory during the month. Cost of goods sold assuming weighted-average cost would be: (Round weighted-average unit cost to 4 decimals)

A) $1,711.

B) $1,700.

C) $1,720.

D) $1,708.

Answer: $1,711.

Dunbar sold 700 units of inventory during the month. Ending inventory assuming weighted-average cost would be: (Round weighted-average unit cost to 4 decimals)

A) $502.

B) $490.

C) $489.

D) $480.

Answer: $489.

Dunbar sold 700 units of inventory during the month. Cost of goods sold assuming LIFO would be:

A) $1,730.

B) $1,700.

C) $1,720.

D) $1,710.

Answer: $1,720.

Dunbar sold 700 units of inventory during the month. Ending inventory assuming FIFO would be:

A) $500.

B) $490.

C) $470.

D) $480.

Answer: $500.

Marvin sold 2,300 units of inventory during the month. Ending inventory assuming LIFO would be:

A) $5,040.

B) $5,055.

C) $5,075.

D) $5,135.

Answer: $5,040.

Marvin sold 2,300 units of inventory during the month. Cost of goods sold assuming LIFO would be:

A) $16,800.

B) $16,760.

C) $16,540.

D) $16,660.

Answer: $16,760.

At what amount would Shoeless report cost of goods sold using the weighted-average cost flow assumption?

A) $110.

B) $73.

C) $70.

D) $105.

Answer: $105.

At what amount would Shoeless report gross profit using LIFO cost flow assumptions?

A) $105.

B) $80.

C) $175.

D) $120.

Answer: $80

At what amount would Shoeless report ending inventory using FIFO cost flow assumptions?

A) $55.

B) $170.

C) $110.

D) $70.

Answer: $110.

True or False: In using the LIFO retail method, the current period cost-to-retail percentage includes both net markdowns and net markups.

True or False: In using the LIFO retail method, the current period cost-to-retail percentage includes both net markdowns and net markups.

Answer: TRUE

True or False: Inventory written down due to LCM may be written back up if market values go back up.

Answer: FALSE

Transfers between categories

a. result in companies omitting recognition of fair value in the year of the transfer.
b. are accounted for at fair value for all transfers.
c. are considered unrealized and unrecognized if transferred out of held-to-maturity into trading.
d. will always result in an impact on net income.


Answer: are accounted for at fair value for all transfers